Chapter 617 has long permitted a derivative action on behalf of a nonprofit corporation. Until this summer that subject occupied a single section, 617.07401, which allowed only members to sue and required a demand on the board. Effective July 1, 2026, chapter 2026-168, Laws of Florida, replaced it with a full framework at sections 617.0741 through 617.0747, governing standing, pleading, stays, dismissal, settlement, and expenses. Two changes matter most: directors and officers may now bring these actions, and a claimant may proceed without having made a demand at all if the complaint explains why.
For directors of Florida nonprofits, trade associations, and community associations, this cuts both ways. The path to suing a board is now clearly marked. So is the path to getting such a suit dismissed. Which one a board travels depends largely on what its records show.
Who May Sue
Section 617.0741 imposes a contemporaneous position requirement. A director, officer, or member may not commence a proceeding in the right of the corporation unless that person holds the position when the action is commenced and either held it when the conduct giving rise to the action occurred, or became a member through transfer or by operation of law from someone who did.
A person who joins an organization after the disputed conduct, and joins in order to challenge it, does not have standing.
What the Complaint Must Allege
Section 617.0742 requires a verified complaint that alleges with particularity the demand, if any, made on the board to obtain the action sought, and either that the demand was refused, rejected, or ignored before the expiration of 90 days from the date it was made, or why waiting out the 90 days would result in irreparable injury to the corporation or in misapplication or waste of corporate assets causing material injury, or the reasons no demand was made at all.
That last option is the significant one. Under the prior section a demand was required, and the 90 day wait could be shortened only in narrow circumstances. A claimant may now plead the reasons no demand was made at all and litigate whether those reasons suffice.
The framework still gives a board something valuable: notice and a defined window. A demand that arrives and is handled seriously within 90 days is a demand handled on the board’s terms rather than in front of a judge.
How a Board Obtains Dismissal
Section 617.0744 is the provision directors should understand best. A court may dismiss a derivative proceeding on the corporation’s motion if a qualified group determined, in good faith and after conducting a reasonable inquiry on which its conclusions are based, that maintaining the proceeding is not in the corporation’s best interests. The determination is made by a majority of qualified directors present at a board meeting if they constitute a quorum, or by a committee of two or more qualified directors appointed by majority vote of qualified directors present. On the corporation’s motion, a court may instead appoint a panel of disinterested and independent individuals.
Then comes the sentence that decides cases. The corporation bears the burden of proof on the qualifications, good faith, and reasonable inquiry of the group making the determination. A conclusory board resolution will not carry it. What carries it is a documented inquiry: what was reviewed, who was consulted, what was considered, and why the board concluded as it did.
Who Counts as a Qualified Director
Section 617.0143 defines the term. For purposes of a dismissal determination, a qualified director is one who does not have an interest in the outcome of the proceeding and does not have a material relationship with a person who does. Material relationship means a familial, financial, professional, employment, or other relationship reasonably expected to impair the objectivity of the director’s judgment.
One provision is easy to misread in the corporation’s favor and easy to misread against it. Under section 617.0143(2)(c), a director is not automatically disqualified merely by being a named defendant, by being a director against whom action is demanded, or by having approved the conduct being challenged. Status alone does not disqualify. An actual interest or material relationship still does, and the corporation still bears the burden of proving the qualification.
The New Officer Standard Creates New Claims
Section 617.0844, also new, sets standards of conduct for officers, including a duty to inform a superior officer, the board, or a committee of any actual or probable material violation of law involving the corporation, or material breach of duty to the corporation, that the officer believes has occurred or is likely to occur. A failure to report up is now a departure from a statutory standard, which is exactly the kind of allegation a derivative complaint is built on. Directors and officers evaluating their exposure should read that section together with section 617.0834, which governs the liability of directors and officers, and section 617.08091, which provides for removal of a director by judicial proceeding.
The Practical Lesson
Nothing in this framework rewards a board that decides quickly and documents thinly. Every protective mechanism in it turns on a record: who was qualified, what inquiry was made, what the board actually considered. Boards that treat minutes as a formality will find the burden of proof difficult to meet. Boards that treat them as evidence will not.
Haft Law Group represents Florida nonprofit corporations, their boards, and their officers in governance matters and litigation. Contact the firm to discuss director and officer exposure under the revised chapter 617.